The double act that has made millions laugh

The duo behind Working Title explain the secret of their success to Sophie Brodie

Name your top five UK films in the past 10 years and you'll probably find most, if not all, were made by one company. Working Title is the most successful British film-maker we have. From mainstream fare such as Four Weddings and a Funeral and Bridget Jones's Diary to the more off-beat The Big Lebowski and Fargo, Working Title has brought tears and laughter to millions, not to mention the British sense of humour.

Its films have won armfuls of Oscars and Baftas. Shame then that it is financed by Americans. Eric Fellner, part one of the double act behind Working Title, dismisses that as a given. All that matters is that he and Tim Bevan make the movies they love. Next week their latest, the sequel to Elizabeth I, premieres in London.

The stunning costumes and stellar cast are a far cry from Fellner's and Bevan's first cash-strapped productions in the 1980s. Both were public school boys who eschewed university for a career making pop videos. In 1984, Bevan founded Working Title with Sarah Radclyffe and made My Beautiful Laundrette. Fellner's first feature was the controversial Sid and Nancy in 1986. Later, Radclyffe left and in 1992 Fellner joined Bevan. With funding from Dutch conglomerate Polygram, they set about changing British film.

Sixteen years later, they are still churning out hits. Despite their huge success, however, Working Title has no revenue and runs at a loss.

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"It's a very, very expensive operation to maintain," says Fellner. He's reluctant to go into detail. However, it appears to work as follows: Working Title is part of US giant GE. Its film subsidiary, NBC Universal, writes a multi-million dollar cheque that Working Title uses to make five films a year. But whenever a film is made, a separate entity owns the rights and revenues from movie theatres and DVD sales are fed back into the distribution arm of NBC. According to GE's annual report, film costs are deferred until they can be offset against gross estimated revenues, calculated using "anticipated release patterns, public acceptance and historical results for similar products". Hence the need for a bankable star.

But if you set the total cost of Working Title's 80-odd movies against the total returns, it is highly lucrative. In 10 years, the company has made $4bn (£1.96bn) at the box office and a further $2bn to $3bn in DVD and TV sales. The average cost to make each movie is $30m, half the Hollywood average. It costs another $30m to market. This suggests total costs over the decade of about $3bn, giving a box office margin of $1bn. "It makes them a lot of money," says Fellner.

This year, Working Title has taken $100m at the UK box office alone for Mr Bean's Holiday, police comedy Hot Fuzz and Atonement, an adaptation of Ian McEwan's war-time novel. It's an impressive score, but dwarfed by annual revenues at NBC, which last year topped $16bn.

Working Title may be loss-making, but Fellner and Bevan look pretty comfortable, despite their mildy chaotic offices in Oxford Street and the fact that when I interview them, both have colds. Oddly, the first topic is politics. Gordon Brown has just called off the election after a swing in the polls to the Tories after their conference.

"These polls are total nonsense," rants Fellner. Bevan agrees with colourful language. They are thinking of "tracking" – an industry term for polling to assess the effect of your movie's pre-marketing, TV ads, billboards etc, on the public. In the past, these have been an accurate guide to opening audience figures. But in the past six months, the results have been meaningless.

Fellner says: "People who go to movies aren't always susceptible to phone calls or being approached on the street so we're not getting the correct information. Nowadays people are all over the place – on the internet or their mobiles. Political pollsters like Mori could be getting poor information for the same reasons."

Another reason Fellner has the Prime Minister on his mind is that, as governor of the British Film Institute, he is hoping for funding to preserve the archive. A week later Culture Secretary James Purnell announced a £25m grant for the BFI. This grant, expectations of further sums to revamp the South Bank and generous tax breaks for UK films has made them warm to the new Prime Minister more than his predecessors.

"The tax credits help us a lot on the bigger films of up to $50m," interjects Bevan.

"When it's on a knife-edge whether the numbers stack up to make a film in this country, then a tax credit of 10pc to 20pc of the budget makes a huge difference. But we're not reliant on them for getting our films made."

The reason they are not, says Fellner, is that the company is in a unique position – it can make non-Hollywood films with Hollywood-size budgets. Bevan says: "We recently made Pride & Prejudice. Any other independent British company would struggle to make it for $8m, but we made it for $20m with a decent star and guaranteed distribution. That is always going to be more successful than the UK film industry equivalent." The movie took $121m at the box office.

Will we ever get to that stage? "You have to accept the film business is basically run from Hollywood," says Fellner, "It's just like auto manufacturers. You can't develop a great car and sell it as an independent. You can develop a great car and make a deal with Mercedes. You should measure our success in talent. Do we have good writers, producers and actors in the UK? Yes we do."

He believes distribution costs are too high to admit new entrants. "Unless you align yourself with these studio giants, you won't get shelf space in Wal-Mart." What about the internet as a means of distribution? "People may be able to compete at that level, but the studios won't let it happen."

Working Title has no plans to release a movie on the net. "The pricing is too complex and arbitrary," says Bevan, pointing to the music industry, where tracks' sales are now governed by technology companies like iTunes rather than big labels. Instead, their next business ventures are in television and theatre. Billy Elliot's transformation into a West End musical has been the catalyst. Are they any other candidates? They're reluctant to say more, but, jokes Bevan, perhaps the Elephant Man musical revue from the Tall Guy might work? Doubtless Jeff Goldblum would be happy to reprise the lead role.